Nearly a third of mobile marketing dollars will go to ad fraud this year, according to a recent report from Juniper Research.

The total digital ad fraud is projected to cost global marketers $84 billion in 2023, or about 22% of the $380 billion spent on online advertising. For mobile, it’s a whopping 30% of spend, claims the study which analysed datasets from across 45 countries.

Marketers are likely to spend nearly $750 billion annually on digital advertising in 2028, with ad fraud accounting for 23% pie even as ad fraud detection tools are increasingly being used in most countries.

While North America and China along with the Far East regions are expected to bear the brunt the most, Indian marketers have a reason to worry as the subcontinent will account for three per cent of the global ad losses by 2028, the study points out.

This report has come at a time when India is projected to spend $21 billion in digital advertising by 2028 due to the surge in mobile and Internet usage, as per a report from Redseer Strategy Consultants released early this year.

Last month, several trade groups in the US and Europe came together to come up with a common definition for “made-for-advertising” sites to check ad frauds.

Such practices impact advertisers as it diminishes their Return on Investment (ROI). They are either spoofed by fraudsters or interacted with by invalid users and automated bots making advertising and marketing campaigns become less effective.

Due to the complexity of the digital advertising system, all stakeholders, including ad networks, attribution platforms and publishers are susceptible to fraudulent attacks.

AI Impact

Fraudsters usually operate through Bots, which are programmed to imitate real internet users, with the aim of repetitively clicking on advertisement links to generate massive artificial impressions.

To avoid detection, these bots are often distributed across a network of connected devices that are used by fraudsters to generate fake traffic to an advert or website. Each device has a different IP address making it harder for advertisers to detect them.

The report suspects that Artificial Intelligence (AI) tools like ChatGPT are being misused by fraudsters to program advanced algorithms to create bots and malware that can mimic human behaviour and steal ad spending from advertisers. What is more concerning is that AI-generated bots are far more difficult to track.

“SIVT (Sophisticated Invalid Traffic) is more difficult than GIVT (General Invalid Traffic) to detect because fraudsters are actively changing patterns of attack to avoid detection. To do this, these fraudsters are investing in AI to not only mask their illegal behaviours, but also detect opportunities where they can spoof valid traffic,” the report warns.

Recommendations

As the digital advertising market is anticipated to grow over 105% over the next five years, this significantly increases the scope and possibilities of ad fraud to occur and intercept advertisers’ revenue from advertising efforts. While efforts to tackle advertising fraud increase, the sheer scale of advertising media leaves significant scope for growth in fraud too.

The report lists three key recommendations: